If you are building your own business, likely the last thing on your mind is estate planning. After all, planning for what will happen to your business when you die is a big ask when planning for success while you’re still alive is hard enough. Nonetheless, you would be foolish to overlook the value of an estate plan in protecting your hard work.
All productive businesses begin by forecasting their success. You’ve heard the cliché: the first step is believing. If you truly think your business is a winner (and you should!), you need to plan for its continued success after you’re gone. This means drafting an estate plan that includes your business interests, and sharing it with current owners and management as well as the intended (future) owners.
An estate plan should be a dynamic document that adapts to the changing circumstances of your business. Insurance, companies, and trusts are a few key elements employed in protecting a business, but their value is only good if they align with your current goals. Buy-sell insurance policies that are out of touch with business values could cause your interests to be sold below fair value, or have those interests bought by a third party that threatens the business itself!
A good tactic for keeping your plan up-to-date is to include an estate plan review as a part of your general financial planning and management strategy. No entrepreneur would deny the importance of holistic financial awareness. This means thinking not only of how to grow your wealth, but also how to ensure that it gets passed on effectively.
Just as important as adaptability and foresight in estate planning is carefully choosing a partner to help you with your plan. A key element here is bringing in the right parties to provide sound and regular valuations for key assets, including your business interests. Seeking qualified outsider input is essential to seeing your business’s bigger picture.
A last point that bears repeating is the importance of sharing your plan with everyone that needs to know about it. Not only does this make for a more robust estate, but it provides you the comfort of knowing that all that you have worked to achieve will be properly taken care of.
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